[Alpharetta, GA] – [25 March 2025] – As federal oversight of financial institutions shifts, lenders are facing increased scrutiny from state regulators. With proposed funding cuts to the Consumer Financial Protection Bureau (CFPB) potentially reducing its enforcement capabilities, individual states are stepping in to fill the gap. This change is creating a more complex and fragmented regulatory landscape, requiring lenders to rethink their compliance strategies.
Traditionally, the CFPB has played a central role in overseeing financial institutions. However, as the agency’s funding and enforcement capabilities face uncertainty, states like New York, California, and Massachusetts are expanding their regulatory reach.
"Many lenders assumed that a weakened CFPB would mean less oversight, but the reality is quite different,” said Michael Benoit, Chairman at Hudson Cook, LLP. “Various state regulators, Attorneys General offices and state consumer protection agencies are stepping in with their own compliance requirements, and in many cases, they’re even tougher than federal regulations.”
New York’s Department of Financial Services (DFS) has already signaled plans to increase enforcement actions, and other states are following suit. This means lenders operating in 50 states and Washington DC will need to manage compliance across different regulatory frameworks, each with its own rules and enforcement priorities.
The shift from a single federal standard to state-by-state regulation presents several challenges, including:
Varying State Regulations – Compliance requirements differ across states, requiring constant monitoring and updates.
Increased Operational Costs – Expanding compliance teams and legal resources to meet state-specific mandates adds financial strain.
Lack of Advocacy at the State Level – Many lenders focus on national trade associations but lack strong relationships with state regulators, leaving them vulnerable to enforcement actions.
With regulations shifting rapidly, lenders need a more agile approach to compliance. Many are turning to technology-driven solutions to help navigate these challenges.
“You aren’t compliant if you aren’t staying current with regulations,” added Lee Nagel, President, DataOceans. “Using DataOceans Compliance Hub+, powered by Hudson Cook, LLP, lenders can quickly apply updated regulatory language to customer letters and notices, ensuring compliance while simplifying creation and delivery.”
How lenders can benefit from DataOceans Compliance Hub+:
Waiting for state regulators to take action isn’t a strategy. Lenders that invest in customer communication compliance technology, such as Compliance Hub+ and proactively engage with state regulators will be best positioned to adapt.
About Hudson Cook
Established in 1997, Hudson Cook, LLP focuses on state and federal consumer and commercial financial services, banking and privacy compliance, regulation, enforcement, and supervision. From our offices around the country, we leverage the knowledge of our attorneys, who understand the complex and interrelated laws and regulations applicable to the consumer and commercial financial services and banking industries. For more information visit www.hudsoncook.com
Don’t let shifting regulations catch you off guard!
Talk to us to discover how you can stay compliant across all states—without overburdening your teams.